Uber, Ola to be regulated, face fare cap

Taxi aggregators such as Uber and Ola may no longer be able to raise fares arbitrarily in times of higher demand.

Taxi aggregators have been operating in a grey area as the motor vehicles act, framed in 1988, doesn’t cover ride-sharing services, allowing them to run without licences.(HT File Photo)

Taxi aggregators such as Uber and Ola may no longer be able to raise fares arbitrarily in times of higher demand.

The cabinet on Wednesday agreed to bring all app-based taxi-hailing services under the regulatory network that will allow state governments to fix a fare cap and check arbitrary charging, the biggest customer grouse. Violators face a fine of up to Rs 2 lakh.

“Once there is a fare cap, aggregators will have to keep the surge pricing within the range that has been fixed,” a road ministry official said.

Taxi aggregators have been operating in a grey area as the motor vehicles act, framed in 1988, doesn’t cover ride-sharing services, allowing them to run without licences.

The ministry is looking to plug this hole and is reworking the licensing norms. It has decided to introduce a new category to cover aggregators.

Under the Motor Vehicle (Amendment) Bill, 2016, an “aggregator” has been defined as “a digital intermediary or marketplace for a passenger to connect with a driver for the purpose of transportation.”

According to rough estimates, aggregator service account for five percent of the Rs 59,720 crore taxi business in India.

Once brought under the motor act, the aggregators will have to adhere to fares prescribed by the government. Violation of licensing norms will invite a fine of up to Rs 1 lakh, the cabinet decided while approving several changes to the motor act.

It will also be mandatory for such taxis to get city permits, which makes a fare meter a must. These taxis operate on an all India tourist permit that doesn’t require a meter.

The intermediary category would also make the aggregators answerable under the Information Technology Act, a double check that would ensure fewer violations, sources said.

The Delhi government had in 2015 unsuccessfully tried to regulate these services.

The Kejriwal government in Delhi got Uber and Ola to drop surge-pricing during the odd-even fortnight in April but steep prices were back once driving restrictions were lifted.

Recently, Karnataka came out with a set of rules to rein in surge-pricing but those have been challenged in the high court by a Bengaluru-based cab aggregator Helion Technologies.

The company has taken the plea that it operates in digital space and the motor act was not applicable to it.

“The road ministry’s proposal to bring in a new category will ensure that services that have direct interface with the public do not go unregulated,” an official said.

Parliament will have to clear the changes. The government plans to table the amendments during the ongoing monsoon session that ends August 12.